How China’s young managers grappled with billion-yuan mandates as AI shocks hit portfolios
As Leopold Aschenbrenner’s US hedge fund saw assets wiped off by more than two-thirds in a single month, some of China’s new portfolio managers also felt the shock across the Pacific, learning bitter lessons early in their careers. The 50-day market turmoil, sparked by a global correction in artificial intelligence stocks in June, turned some of China’s rookie managers into an unwitting focal…
In June, a 50-day market correction triggered by a global decline in artificial intelligence stocks hit China's inexperienced portfolio managers hard. This turbulent period served as an early learning curve for these young professionals, who had to navigate billion-yuan mandates with caution. Veteran investors, too, were forced to grapple with client questions as their portfolios suffered losses.
Yeqiang Yuan, a portfolio manager with three and a half years of experience at Caitong Fund Management, witnessed a 36% and 33% drop in the value of his two inaugural portfolios between his appointment on June 11 and his reporting date on July 30. He inherited a total of 7.28 billion yuan in assets at the end of the second quarter, a substantial sum for a first-time manager. The steep decline was traced back to his heavy investment in tech stocks, which took a nosedive after their earlier surge.
Wu Dongdong, a four-year veteran at Fullgoal Fund Management, saw his newly established portfolio plummet by nearly 34% within just 46 days following its June 16 launch. Wu Haining, a portfolio manager at Hengyue Fund Management, made the drastic decision to divest her consumer holdings upon taking over on June 10, reallocating her focus to AI hardware. This move resulted in a nearly 41% decline in her fund's value within 55 days, with her top holding, GigaDevice, experiencing a loss of more than 40% over 20 trading days.
These cases highlight the additional challenges faced by new portfolio managers in an increasingly volatile market. Compared to seasoned investors, these young professionals often have less funding support to absorb the impact of significant drawdowns, leaving little room for error. In the United States, an example of this volatility can be seen in the experience of 25-year-old Leopold Aschenbrenner, who managed to save his Situational Awareness LP by offloading US$16 billion in leveraged public equity positions to Citadel to avert total liquidation after its 67% plunge in July.
The recent surge in China's securities investment, driven by the tech boom in Shanghai and Shenzhen, has led to over 1,000 portfolio managers resigning this year, with 768 registered as of the reporting date.
Written by urgent.news from SCMP Business's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
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